Riding the Float, Smartly? (for 1 month)
I am currently refinancing my house and I've run into a bit of a conundrum. Because my property tax is due in November, and my closing date got pushed into early November, I have to pay my $5,600 in property tax as part of my closing costs, while I wait a few weeks for my $6,100 escrow check to come back to me with the money that SHOULD have gone towards property tax.
I simply do not have enough in the budget to pay for this without riding the float for a few weeks, and putting expenses on my credit card with the knowledge that I will be paid before they come due. Normally I would budget this out of my e-fund, but I had a 2-week hospital/ICU stay this summer. Many thanks to YNAB for helping me overcome my medical bills, but that option is off the table.
So I'm stumped at how I should handle this within YNAB. If I could pay with CC, I would just budget +5600 to Mortgage, CC Payment Available would increase by 5600 which I would budget -5600 back out of to make it ~0 again, everything would be green, and then when I get the money, I would budget +5600 of it into CC payment. Since I have to pay through checking, my best thought is to do about the same, but this leaves me a big red -5600 on CC Payment.
Much of the advice I've seen has revolved around some variation of take money out of other categories, and then when you spend on the CC, don't budget that spending until you get the payment. Maybe I'm misunderstanding something, because while that keeps all the fields happy and green, that isn't budgeting anymore. I want to deposit that check, pay off the CC, and know I'm right back where I should be. No surprises that I overspent during my period of uncertainty.
The other option the bank gave was to postpone my closing, but my rate lock at 2.875% interest would expire, which is basically a non-starter.
I think you're overthinking it.
You have to write a check for $5600(+). I assume you have $5600+ in your checking account, and therefore in your budget, just not in your property tax category. Move money from other categories until you have $5600 in the Tax category. Write check.
If you had $500 in, say, your grocery category and now you have $0 because you moved it to the Tax category, when you buy groceries with your CC, the grocery category will go yellow negative overspent. Rinse/repeat with your other day to day spending until you get your escrow check.
If the escrow check comes before the end of November, use it to cover the yellow overspending in all your categories. If it comes in December, budget directly to the CC category to make the available match the CC balance.
If you make other budgeted purchases, the CC Payment category would have funds you could temporarily take. This is yet another reason not to pay your CC account to $0.
The "official" way is to shift funds from other categories, so you know exactly where your remaining cash can be used. (Leave the cash-only expenses green.) It's also a lot of moving, just to move it back a week or so later.
ASSUMING YOU CAN SURVIVE ON CREDIT AND YOUR REMAINING CASH UNTIL THE ESCROW REFUND ARRIVES, the pragmatic approach would be to leave the Property Tax category red. This avoids the busy work of the 2x shuffle from umteen categories.
Basically, you do what millions of people do without YNAB. Put everything on the CC and trust that money will arrive in time. If you have cash in other accounts, use it to ensure checking doesn't overdraft.
This is the kind of advice that would rake in the down votes in reddit. However, you have already stated you're going down this road regardless (i.e., not losing the lock).
Given that, I just don't see the point of mucking about in the budget.
Aquamarine Rhythm said:
It's almost like saying, "I can make this budget work, only if I can put this many dollars on the card, rather than from cash"
Yep, that's exactly what it's saying. Running a negative CC Payment category is the typical way to ride extreme cases of CC float. The key to riding the float is you have to use the CC as much as possible, holding back your real cash for the purchases that cannot be put on a CC. You have to manage your cash supply on your own (without the budget), which most people actually manage to do fairly well in their "pre-YNAB" life.
(The link is more for general edification and perhaps other users. You won't be applying that workflow.)
ok, just to muddy the water I am going to suggest a different tack. Write the cheque for the tax. The category will be overspent. Leave it that way. Use the rest of the categories in the normal way. Since you said your day to day spending is mostly on the credit card, not having the money in the bank to cover those expenses isn't an issue.